WEBVTT - The Origins of Hulu 0:00:04.480 --> 0:00:12.319 Welcome to Tech Stuff, a production from iHeartRadio. Hey there, 0:00:12.320 --> 0:00:15.520 and welcome to tech Stuff. I'm your host, Jonathan Strickland. 0:00:15.520 --> 0:00:19.080 I'm an executive producer with iHeart Podcasts and How the 0:00:19.079 --> 0:00:22.760 tech are you? You know, I've talked about streaming an 0:00:22.840 --> 0:00:27.040 awful lot on the show. Now just for context tech Stuff. 0:00:27.160 --> 0:00:31.120 This podcast began after Netflix had already kind of got 0:00:31.120 --> 0:00:34.400 the ball rolling back in January two thousand and seven, 0:00:34.720 --> 0:00:37.760 so I didn't have an episode that covered the story 0:00:37.800 --> 0:00:43.160 of Netflix launching its online video streaming But in twenty 0:00:43.200 --> 0:00:46.560 thirteen we did do an episode about the Big three 0:00:46.840 --> 0:00:52.319 streaming services, which at that time included Netflix, Amazon, and 0:00:52.760 --> 0:00:57.600 Today's Star Hulu. So we're doing actually a two parter 0:00:57.880 --> 0:01:00.880 on Hulu. This will be part one. So even back 0:01:00.920 --> 0:01:04.440 then we mentioned how there were other offerings available beyond 0:01:05.000 --> 0:01:07.920 the Big three, but today it's almost a joke with 0:01:08.000 --> 0:01:10.600 how many services are out there, and it's come as 0:01:10.600 --> 0:01:14.080 no surprise that we're starting to see these different services 0:01:14.200 --> 0:01:17.840 kind of glom on and merge together, either in bundles 0:01:18.080 --> 0:01:20.640 like the one Comcast is going to offer with Netflix, 0:01:20.800 --> 0:01:24.800 Peacock and Apple TV Plus, or in outright mergers and 0:01:24.840 --> 0:01:29.319 acquisitions such as what's happened with Disney and you know Hulu. 0:01:29.840 --> 0:01:34.240 It's almost like the streaming landscape is slowly transforming into 0:01:34.280 --> 0:01:37.600 what cable television used to be. And we already know 0:01:37.640 --> 0:01:41.240 that cable TV's business model has a ceiling because we 0:01:41.360 --> 0:01:44.520 hit that ceiling. That's why we're seeing things kind of 0:01:44.560 --> 0:01:46.760 in a decline or one of the reasons why I 0:01:46.760 --> 0:01:50.600 shouldn't be so definitive, I guess. Anyway, all that's beside 0:01:50.600 --> 0:01:54.680 the point. I want to talk about Hulu. How Hulu 0:01:54.680 --> 0:01:59.040 got started, because it's an interesting origin, and how the 0:01:59.160 --> 0:02:02.520 service and company evolved, and how now it is co 0:02:02.680 --> 0:02:07.440 mingling with Disney Plus, even as the actual acquisition deal 0:02:07.600 --> 0:02:10.480 is still kind of finalizing, despite the fact that Disney 0:02:10.520 --> 0:02:14.960 paid the quote unquote final fee last year. That whole 0:02:15.240 --> 0:02:20.240 story is just it really just points to corporate shenanigans, honestly, 0:02:20.400 --> 0:02:23.720 in my opinion at least, So let's start off at 0:02:23.720 --> 0:02:26.840 the beginning, where I am told it's a very good 0:02:26.880 --> 0:02:29.960 place to start. So hulu story, at least, the part 0:02:29.960 --> 0:02:33.840 of Hulu's story that faced the public, began in March 0:02:33.880 --> 0:02:37.440 two thousand and seven. Hulu, which was not named at 0:02:37.440 --> 0:02:40.280 this point. It didn't have its name, but what would 0:02:40.320 --> 0:02:44.440 become Hulu was announced as a joint venture between newscre 0:02:44.960 --> 0:02:49.000 and what at that time was just plain old NBC Universal. 0:02:49.280 --> 0:02:53.320 Comcast would announce plans to acquire NBC Universal two years later, 0:02:53.600 --> 0:02:56.720 and so things would get more complicated down the line. 0:02:57.040 --> 0:02:59.960 Now this is where my memory actually plays tricks on me, 0:03:00.200 --> 0:03:02.760 because when I was thinking about this before I actually 0:03:02.800 --> 0:03:06.920 started to dig into all the different articles and blog 0:03:06.960 --> 0:03:10.360 posts and stuff around the time of Hulu's launch. In 0:03:10.440 --> 0:03:13.000 my head, Hulu was meant to be a counter to 0:03:13.120 --> 0:03:17.359 Netflix because Netflix was getting into video streaming. But as 0:03:17.360 --> 0:03:21.160 it turns out, that really isn't the case when you're 0:03:21.200 --> 0:03:23.760 talking about the two thousand and six two thousand and 0:03:23.800 --> 0:03:27.720 seven era, because at that stage, Netflix wasn't really seen 0:03:27.760 --> 0:03:30.959 as that large of a threat, right. I mean, Netflix 0:03:31.000 --> 0:03:35.480 had killed Blockbuster arguably, but it wasn't thought to be 0:03:35.960 --> 0:03:41.040 setting its sites on traditional broadcast and cable media. Instead, 0:03:41.080 --> 0:03:44.720 Netflix was essentially viewed as Blockbuster by mail because it 0:03:44.800 --> 0:03:48.040 was much better known for its DVD and Blu ray 0:03:48.160 --> 0:03:53.000 rental services than as a video streaming platform. So this 0:03:53.160 --> 0:03:56.040 was well before Netflix would shake things up with its 0:03:56.040 --> 0:03:59.080 own original programming like House of Cards. House of Cards 0:03:59.080 --> 0:04:03.920 didn't debut until twenty thirteen, so Netflix was not seen 0:04:03.960 --> 0:04:09.240 as a existential threat at this point. Instead, Hulu's reisondetre 0:04:09.720 --> 0:04:12.400 had more to do with piracy that was happening on 0:04:12.440 --> 0:04:17.400 YouTube and how internet streaming was starting to show signs 0:04:17.400 --> 0:04:21.200 that it could impact traditional cable television, as well as 0:04:21.279 --> 0:04:24.880 concerns about a company that was on a metaphorical rocket 0:04:24.920 --> 0:04:28.240 ship around this time, and in that case, I'm specifically 0:04:28.279 --> 0:04:33.040 talking about Apple, not Netflix. But first let's start with YouTube. 0:04:33.080 --> 0:04:37.159 So Steve Chen and jau Ed Karim and Chad Hurley 0:04:37.360 --> 0:04:41.240 founded YouTube in two thousand and five. These days you 0:04:41.320 --> 0:04:44.720 can find epic long videos on YouTube. In fact, over 0:04:44.760 --> 0:04:49.880 the weekend yesterday, I was watching a four hour video 0:04:50.200 --> 0:04:55.719 from Jenny Nicholson, who produces phenomenal video essays. They're few 0:04:55.720 --> 0:04:57.920 and far between, but she puts a ton of work 0:04:57.960 --> 0:05:00.960 into them, and she did a four hour video about 0:05:00.960 --> 0:05:04.880 her experience at the Star Wars Galactic Cruiser Hotel at 0:05:04.880 --> 0:05:08.599 Disney World, and it's fascinating. It's a little it's very 0:05:08.640 --> 0:05:12.839 cringey at times if you're not into like participatory theater. 0:05:13.080 --> 0:05:16.640 Even as someone who has performed in participatory theater. I 0:05:16.680 --> 0:05:19.320 found it a bit cringey at times, not because of Jenny, 0:05:19.400 --> 0:05:22.320 but because of the situation that was going on. And 0:05:22.360 --> 0:05:25.159 it's also like just frustrating to see someone who is 0:05:25.200 --> 0:05:28.960 clearly so passionate about Star Wars and who has a 0:05:29.000 --> 0:05:32.880 really good platform ended up having a really, I would argue, 0:05:33.000 --> 0:05:37.120 lackluster experience for a premium price. Anyway, I don't know 0:05:37.200 --> 0:05:40.360 Jenny Nicholson, she doesn't know me. I just like her work. 0:05:40.600 --> 0:05:43.440 And the point was that today you can watch four 0:05:43.480 --> 0:05:45.599 hour long videos on YouTube if you want to. But 0:05:45.839 --> 0:05:48.880 you know, the interesting thing is when YouTube first launched, 0:05:48.960 --> 0:05:53.320 there wasn't really a limitation on video length back then either. Now, 0:05:53.440 --> 0:05:58.560 the resolution for YouTube videos was way way lower, but yeah, 0:05:58.600 --> 0:06:02.960 you weren't limited to short videos. However, that changed in 0:06:03.000 --> 0:06:05.960 the spring of two thousand and six, and the reason 0:06:06.240 --> 0:06:09.200 for that change is because a lot of the longer 0:06:09.279 --> 0:06:13.240 videos that were getting uploaded to YouTube were bootlegs or 0:06:13.400 --> 0:06:18.359 pirated copies or unauthorized uploads of films and TV shows. 0:06:18.880 --> 0:06:22.320 So that was what was making studios angry. It was 0:06:22.400 --> 0:06:25.880 copyright infringement. You know, it was going up without their 0:06:26.120 --> 0:06:29.919 consent and without their compensation, and in fact, in those days, 0:06:29.960 --> 0:06:33.520 YouTube wasn't monetizing anything. This was in the growth phase 0:06:33.560 --> 0:06:37.240 for YouTube, so the whole media industry was starting to 0:06:37.600 --> 0:06:40.880 get pretty prickly about this. And you know, just a 0:06:40.880 --> 0:06:45.840 few years earlier, that industry ended up banding together and 0:06:46.080 --> 0:06:49.680 did a number on peer to peer networking services like 0:06:49.760 --> 0:06:54.640 Kaza and Napster like they sued those companies into oblivion. 0:06:55.040 --> 0:07:00.719 So obviously YouTube was not super keen on get the 0:07:00.760 --> 0:07:04.440 studio's iire in that same way, it could be a 0:07:04.480 --> 0:07:07.200 threat to their very existence. So in March two thousand 0:07:07.200 --> 0:07:12.000 and six, YouTube issued a new limitation on videos. They 0:07:12.040 --> 0:07:14.880 could only be up to ten minutes long, and then 0:07:15.080 --> 0:07:18.000 you would get cut off, So you couldn't post a 0:07:18.120 --> 0:07:22.000 full television episode or a movie in one video. If 0:07:22.000 --> 0:07:24.400 you were really trying to share that kind of thing, 0:07:24.680 --> 0:07:27.920 you had to find places to break up the video 0:07:28.080 --> 0:07:31.720 into ten minute or shorter increments and then do a 0:07:31.720 --> 0:07:34.640 whole series of them. So you would have to go 0:07:34.680 --> 0:07:36.640 to a lot of trouble. In other words, in order 0:07:36.720 --> 0:07:39.080 to get just an episode of a television show up, 0:07:39.240 --> 0:07:42.440 let alone a movie. Plus you would still potentially get 0:07:42.480 --> 0:07:45.960 into trouble down the line if the studios found out, hey, 0:07:46.200 --> 0:07:49.239 you're publishing stuff without our permission. But this is why 0:07:49.440 --> 0:07:52.440 older YouTube videos, the really long stuff, would be divided 0:07:52.440 --> 0:07:55.880 into multiple parts. I'm reminded of the infamous Star Wars 0:07:55.880 --> 0:07:59.280 episode one review by Red Letter Media, the mister Plinkett 0:07:59.280 --> 0:08:04.480 review that was originally in several segments because old man 0:08:04.560 --> 0:08:06.600 mister Plinkett had a lot to say about it. Also, 0:08:06.640 --> 0:08:08.240 I didn't realize this episode was going to be so 0:08:08.280 --> 0:08:10.960 Star Wars heavy. That wasn't my intent. But in the 0:08:11.000 --> 0:08:14.560 back half of two thousand and six, Google acquired YouTube 0:08:14.560 --> 0:08:17.440 for the princely sum of one point sixty five billion 0:08:17.560 --> 0:08:21.520 dollars in Google stock. Google definitely had a vested interest 0:08:21.560 --> 0:08:24.120 in making certain that the piracy issue was addressed because 0:08:24.160 --> 0:08:27.240 as a big company that had deep pockets, and you know, 0:08:27.640 --> 0:08:30.960 there's nothing stopping the media companies from coming after that. Filthy, 0:08:31.000 --> 0:08:36.480 filthy luker. If Google seemed complacent with piracy while the 0:08:36.480 --> 0:08:39.839 company discouraged the practice, it's you know, the users who 0:08:39.920 --> 0:08:43.120 ultimately were steering things, and the folks at major media 0:08:43.160 --> 0:08:46.400 companies were not thrilled about not having control over this. 0:08:46.760 --> 0:08:49.920 You did have major studios establish their own YouTube channels, 0:08:49.920 --> 0:08:52.520 but I bet that didn't feel so great. To them. Either, 0:08:52.920 --> 0:08:57.040 YouTube could help with marketing and spread awareness of shows 0:08:57.080 --> 0:09:01.120 and that kind of thing, but monetizing your online publishing 0:09:01.200 --> 0:09:03.680 was a different matter. I mean, the official YouTube Partner 0:09:03.679 --> 0:09:06.319 program didn't launch until the end of two thousand and seven, 0:09:06.559 --> 0:09:09.120 and you know, most businesses are not keen to give 0:09:09.160 --> 0:09:12.600 away for free what they typically would earn revenue on, 0:09:13.000 --> 0:09:17.200 so finding a way to deliver television content online in 0:09:17.240 --> 0:09:20.920 a way that could actually generate revenue was a long 0:09:21.000 --> 0:09:25.000 term goal. Perhaps of more concern, however, was Apple, at 0:09:25.080 --> 0:09:29.040 least to NBC Universal's CEO Jeffrey Zucker at the time. 0:09:29.400 --> 0:09:31.720 This has to do with the media industry's challenge of 0:09:31.760 --> 0:09:35.360 figuring out how to incorporate streaming at all in its 0:09:35.400 --> 0:09:38.320 overall strategy, let alone how to set streaming up as 0:09:38.320 --> 0:09:42.640 a potential successor to broadcast in cable distribution. Apple already 0:09:42.720 --> 0:09:45.520 had an established business in which folks could browse the 0:09:45.600 --> 0:09:49.600 iTunes store for media content, which included television shows and films, 0:09:49.800 --> 0:09:53.840 and users could purchase those things through the iTunes store, 0:09:53.960 --> 0:09:57.439 which made Apple kind of a gatekeeper for media. Plus, 0:09:57.480 --> 0:10:00.520 Apple could take a hefty cut of those transactions, which 0:10:00.559 --> 0:10:02.600 means a lot less of that cheddar would make its 0:10:02.640 --> 0:10:05.959 way to the studios that were actually responsible for producing 0:10:06.200 --> 0:10:08.959 the content. And just as companies aren't keen to give 0:10:08.960 --> 0:10:11.480 away for free what they usually make money off of, 0:10:11.720 --> 0:10:14.040 they're also not super happy to share their lunch with 0:10:14.120 --> 0:10:17.040 someone else. Dollars going to Apple should be going to 0:10:17.080 --> 0:10:20.240 the studios. Gush, darn it. So this is what Jeff Zucker, 0:10:20.280 --> 0:10:23.320 the CEO of NBC Universal, was up in arms about. 0:10:23.400 --> 0:10:26.439 He proclaimed that iTunes, while an effective way to deliver 0:10:26.600 --> 0:10:30.080 television content to digital customers, was really a way to 0:10:30.200 --> 0:10:36.000 go quote from dollars into pennies end quote on those transactions, 0:10:36.000 --> 0:10:39.319 meaning that media outlets like NBC Universal should be making 0:10:39.800 --> 0:10:42.440 much more per transaction than what they were, and that 0:10:42.600 --> 0:10:46.440 the business model heavily favored the gatekeepers like iTunes. So 0:10:47.160 --> 0:10:49.880 what would be the solution. Well, the solution is to 0:10:49.880 --> 0:10:54.000 make your own media streaming platform, as Bender from Futurama 0:10:54.040 --> 0:10:57.680 would say, and you would control this platform. Zucker made 0:10:57.679 --> 0:11:00.800 some pretty big decisions leading up to the announcement of Hulu. 0:11:00.880 --> 0:11:04.720 He decided not to renew NBC Universal's contract with Apple, 0:11:05.000 --> 0:11:08.600 which meant NBC content would disappear from the iTunes store. 0:11:08.840 --> 0:11:12.360 He also had the company closed down the NBC Universal 0:11:12.400 --> 0:11:16.360 YouTube channel, so you couldn't get NBC Universal content there either, 0:11:16.400 --> 0:11:20.319 at least not legally, and all the while, NBC Universal 0:11:20.600 --> 0:11:24.480 began to work with newscre the owners of Fox at 0:11:24.480 --> 0:11:28.880 the time, to create what would become Hulu. All right, 0:11:29.200 --> 0:11:31.240 we're going to continue this story in just a moment, 0:11:31.400 --> 0:11:42.440 but first let's take a quick break to thank our sponsors. 0:11:43.960 --> 0:11:48.800 So we're back, News Corp. Owners of Fox, twentieth Century 0:11:48.840 --> 0:11:52.680 Fox at that time, and NBC Universal, which would soon 0:11:52.720 --> 0:11:56.120 become the property of Comcast, get together and decide that 0:11:56.120 --> 0:11:59.560 they want to make their own streaming thing, but they're 0:11:59.559 --> 0:12:02.439 not entirely sure what that's gonna be. Originally, the plan 0:12:02.559 --> 0:12:04.840 was to make a way to share or post content 0:12:05.280 --> 0:12:09.040 from these two companies on various places across the Internet, 0:12:09.280 --> 0:12:15.320 specifically on sites like Yahoo, Aol, and the king of 0:12:15.559 --> 0:12:19.160 social media MySpace. That's a trio of names that at 0:12:19.200 --> 0:12:21.600 one point in the Internet history, all three of those 0:12:21.640 --> 0:12:25.640 were considered unassailable. They were thought of as being giants 0:12:26.080 --> 0:12:29.080 and too big to fail, which really just proves the 0:12:29.120 --> 0:12:32.480 too big to fail concept just isn't true. You're never 0:12:32.600 --> 0:12:35.000 too big to fail. We humans can always find a 0:12:35.000 --> 0:12:36.920 way to fail if we have enough time on our 0:12:36.960 --> 0:12:40.520 hands to do it. Anyway, you probably know that you 0:12:40.559 --> 0:12:43.960 can embed media players on web pages, right If you've 0:12:43.960 --> 0:12:46.640 ever visited a web page that had a YouTube player 0:12:46.800 --> 0:12:49.560 embedded in that page, you know what I'm talking about. 0:12:49.640 --> 0:12:53.240 You can watch a YouTube video within a web page 0:12:53.240 --> 0:12:55.720 without actually having to go to YouTube itself. Well, that's 0:12:55.760 --> 0:12:58.880 what Hulu was trying to do originally. Of course, it 0:12:58.920 --> 0:13:01.959 wasn't called Hulu yet. In fact, it wasn't called anything yet. 0:13:02.280 --> 0:13:05.880 But the basic idea was to follow this particular strategy. 0:13:06.040 --> 0:13:09.160 So why were the companies thinking in this way? What 0:13:09.320 --> 0:13:12.200 largely had to do with the monumental acquisition that news 0:13:12.200 --> 0:13:14.480 Corp Had made In the summer of two thousand and five. 0:13:14.920 --> 0:13:19.520 News Corp bought MySpace for a whopping five hundred eighty 0:13:19.840 --> 0:13:23.800 million dollars. This would later turn out to be a 0:13:23.960 --> 0:13:28.560 colossal mistake, as news Corp would ultimately dump my Space 0:13:28.600 --> 0:13:32.640 for just thirty five million dollars in two thy eleven. 0:13:33.000 --> 0:13:36.640 So buying something for five hundred and eighty million and 0:13:36.640 --> 0:13:40.120 then selling it for thirty five million not great. In fact, 0:13:40.360 --> 0:13:43.079 for some it would rank as one of the worst 0:13:43.280 --> 0:13:46.480 deals in tech history. I don't know if it quite 0:13:46.679 --> 0:13:49.640 merits that because there have been some other whoppers that 0:13:49.679 --> 0:13:52.000 have happened, Like it's not good, but there have been 0:13:52.080 --> 0:13:55.120 other really bad ones. I will say that the MySpace 0:13:55.240 --> 0:14:00.400 acquisition is perhaps one of the most infamous bad tech deals. Anyway, 0:14:00.760 --> 0:14:04.400 NewsCorp had this social media platform, and they had it 0:14:04.440 --> 0:14:08.560 since late two thousand and five. And remember Facebook wouldn't 0:14:08.600 --> 0:14:12.360 really start its trajectory of crazy growth until late two 0:14:12.360 --> 0:14:14.920 thousand and six, when it would finally open up to 0:14:15.080 --> 0:14:18.280 people who weren't you know, college students. And it's easy 0:14:18.280 --> 0:14:20.640 to forget, but we're talking about time when MySpace was 0:14:20.760 --> 0:14:24.560 almost synonymous with social networks. I mean, nobody thinks about 0:14:24.600 --> 0:14:28.560 it today, but at the time it was the dominant 0:14:28.600 --> 0:14:32.800 social platform. So the thought was that this social platform 0:14:32.840 --> 0:14:35.560 asset could serve as a brilliant way to serve media 0:14:35.640 --> 0:14:38.560 to customers. You know, design a web delivery system that 0:14:38.680 --> 0:14:42.640 leverages the places where people were already going online. That 0:14:42.680 --> 0:14:45.640 would include the AOL landing page because tons of people 0:14:45.640 --> 0:14:49.040 were still using Aol as their Internet service provider, or 0:14:49.160 --> 0:14:52.440 the Yahoo landing page because Yahoo was essentially serving as 0:14:52.440 --> 0:14:55.080 a web portal to the rest of the world. Wide Web, 0:14:55.360 --> 0:14:59.320 and then MySpace the dominant social platform. You wouldn't have 0:14:59.360 --> 0:15:02.400 to train people to go to your website. You would 0:15:02.480 --> 0:15:04.800 just establish a foothold in the places where people were 0:15:04.840 --> 0:15:08.920 already congregating. This strategy would change in large part due 0:15:08.960 --> 0:15:12.160 to the companies coaxing a project leader from a different 0:15:12.280 --> 0:15:16.960 Internet giant. So I'm talking about a man named Jason Kylar, 0:15:17.360 --> 0:15:20.920 who was a senior vice president at Amazon, and he 0:15:21.040 --> 0:15:25.120 got lured away to become the head of this still 0:15:25.360 --> 0:15:30.160 unnamed project between newscre and NBC Universal. Now, Kaylar's career 0:15:30.480 --> 0:15:33.640 would have a lot of interesting intersection points with streaming 0:15:33.640 --> 0:15:36.600 in general and with Hulu in particular. So for example, 0:15:36.880 --> 0:15:40.000 before he worked at Amazon, Kyler was an analyst with 0:15:40.080 --> 0:15:42.880 the Walt Disney Company for a couple of years. Obviously, 0:15:42.960 --> 0:15:45.600 Disney will go on to become an important part of 0:15:45.640 --> 0:15:47.960 the Hulu story, and I might as well talk about 0:15:47.960 --> 0:15:52.040 his time after he left Hulu, because this isn't an 0:15:52.080 --> 0:15:54.800 episode about his career specifically, although he does play a 0:15:54.920 --> 0:15:57.960 very important part in this particular episode. He would stick 0:15:57.960 --> 0:16:00.480 with Hulu for six full years, which you know, it's 0:16:00.520 --> 0:16:04.000 not bad for a CEO of a startup company. If 0:16:04.040 --> 0:16:06.960 you're not like a founder, especially like he was brought 0:16:07.000 --> 0:16:09.280 on to do this, although you could argue that the 0:16:09.280 --> 0:16:12.920 work he did was at least equivalent to a regular founder. 0:16:13.080 --> 0:16:14.840 He would then go on to co found a video 0:16:14.880 --> 0:16:17.920 platform site called Vessel. He did that in twenty thirteen. 0:16:18.040 --> 0:16:22.480 Verizon would acquire Vessel, and not long after that, Verizon 0:16:22.520 --> 0:16:24.680 would shut down Vessel. But hey, you know that's a 0:16:24.680 --> 0:16:27.160 big payout, baby. So Kyler would also sit on the 0:16:27.160 --> 0:16:30.520 board of directors for several different organizations and companies, and 0:16:30.560 --> 0:16:34.200 then he would become CEO of WarnerMedia in twenty twenty, 0:16:34.480 --> 0:16:38.640 which means he was there during the early launch days 0:16:38.680 --> 0:16:42.640 of HBO Max, that streaming platform, and he stuck around 0:16:42.680 --> 0:16:46.040 as CEO of WarnerMedia until AT and T decided to 0:16:46.120 --> 0:16:49.960 divest itself of WarnerMedia and sell it off to Discovery, 0:16:50.120 --> 0:16:53.680 whereupon David Zaslov would take over the whole shebang. And 0:16:54.080 --> 0:16:58.320 we all know about the Zaslov regime over at Warner 0:16:58.320 --> 0:17:02.360 Brothers Discovery. So his departure, he's kind of been keeping 0:17:02.440 --> 0:17:04.600 himself busy by being on the board of directors of 0:17:04.640 --> 0:17:08.879 even more organizations and companies. But throughout his entire career, 0:17:08.920 --> 0:17:12.240 he's been heavily involved in media in general and streaming 0:17:12.280 --> 0:17:16.600 in particular, and it's a pretty impressive career. So Kyler 0:17:16.640 --> 0:17:20.359 comes over from Amazon and leads this project, and the 0:17:20.400 --> 0:17:23.800 strategy then starts to shift. It moves away from this 0:17:23.920 --> 0:17:26.920 idea of an embedible player that will live in other 0:17:27.000 --> 0:17:31.840 places to a destination media site similar to YouTube, but 0:17:31.960 --> 0:17:37.840 specifically crafted to host studio produced entertainment. Right YouTube is 0:17:37.880 --> 0:17:41.920 the user generated video site. You go to YouTube typically 0:17:42.040 --> 0:17:45.800 to watch stuff that other YouTubers have created, not to 0:17:45.920 --> 0:17:49.840 watch things that were produced by an established media company. 0:17:50.080 --> 0:17:53.040 So this project would be more for the established stuff, 0:17:53.080 --> 0:17:57.400 the studio stuff, the professional stuff, and the companies were 0:17:57.440 --> 0:18:01.680 also hoping that this would discourage Netflix's growing relevance. Again, 0:18:01.800 --> 0:18:06.199 Netflix really wasn't a threat yet, but the concern was 0:18:06.240 --> 0:18:10.320 that they didn't want a company that was not part 0:18:10.320 --> 0:18:14.439 of the established media industry to become the gatekeeper for 0:18:14.560 --> 0:18:18.959 the online branch of media. For the longest time, television 0:18:18.960 --> 0:18:22.280 and film studios had reigned supreme. They didn't have to 0:18:22.320 --> 0:18:25.840 answer to anyone else. Really, you know, they were times 0:18:25.880 --> 0:18:29.280 where they got broken up by various regulators and governments 0:18:29.320 --> 0:18:32.720 because they owned so much of the entertainment landscape that 0:18:32.760 --> 0:18:34.560 it was considered to be a monopoly. Like when a 0:18:34.880 --> 0:18:38.040 company owns not just the movie studios but also movie 0:18:38.080 --> 0:18:42.399 theaters and film processing companies, that becomes a problem. So 0:18:42.480 --> 0:18:44.920 all that got broken up years and years and years ago, 0:18:45.000 --> 0:18:47.320 but they still had a ton of power, so the 0:18:47.400 --> 0:18:49.919 idea of seeding some of that power to a company 0:18:50.000 --> 0:18:53.840 like Netflix was not very palatable when Kyler took over 0:18:53.880 --> 0:18:57.359 the project. The nickname that folks gave to this because 0:18:57.359 --> 0:19:00.840 it still didn't have an official name yet, was Clown 0:19:01.160 --> 0:19:04.840 Co or Clown Company, And apparently it got that nickname 0:19:04.880 --> 0:19:08.880 because the general consensus was any joint project that would 0:19:08.880 --> 0:19:13.399 be helmed by two or more established media companies was 0:19:13.960 --> 0:19:17.280 bound to fail. At some point, one company would try 0:19:17.320 --> 0:19:20.679 to exert more authority than the other or object to 0:19:20.720 --> 0:19:24.800 some fundamental aspect of the project, and nothing would ever resolve. 0:19:24.880 --> 0:19:28.720 You would never get consensus among the stakeholders for what 0:19:29.000 --> 0:19:31.640 was the right thing to do, and the whole thing 0:19:31.680 --> 0:19:35.720 would crumble in on itself. Tech blogs, in particular, prophesied 0:19:36.119 --> 0:19:39.800 doom from the get go. In July two thousand and seven, 0:19:39.880 --> 0:19:43.520 a company called Providence Equity joined News Corp. At NBC 0:19:43.720 --> 0:19:46.920 Universal as a stakeholder in the project, purchasing a ten 0:19:46.960 --> 0:19:51.640 percent ownership in Hulu, and this was quoted as being 0:19:51.680 --> 0:19:56.000 somewhere around one hundred million dollars of equity in the company. 0:19:56.359 --> 0:20:00.720 Just pretty darn impressive. Now, the name Hulu, I don't 0:20:00.760 --> 0:20:03.840 know exactly when it was arrived at, but I do 0:20:03.920 --> 0:20:06.680 know when it was revealed. It was revealed in August 0:20:06.800 --> 0:20:10.200 two thousand and seven when the website actually went live. However, 0:20:10.520 --> 0:20:14.040 this website went live with no video. You couldn't go 0:20:14.119 --> 0:20:17.239 there to watch anything. It was kind of like a 0:20:17.280 --> 0:20:20.280 site that was parked there and was announcing the name 0:20:20.320 --> 0:20:22.840 of the service, so there was no streaming player yet. 0:20:23.040 --> 0:20:25.960 Kyler later said that the actual name came from a 0:20:26.000 --> 0:20:29.920 Mandarin word that means gord, with the idea of Hulu 0:20:30.000 --> 0:20:32.919 containing all this stuff in it, it'd be a streaming 0:20:32.960 --> 0:20:36.439 service with access to lots of content, similar to a 0:20:36.480 --> 0:20:39.560 stuffed gord. I guess I don't know. I don't really 0:20:40.000 --> 0:20:43.200 get the analogy that much. I don't know how much 0:20:43.240 --> 0:20:46.720 the actual word was super important. The point is the 0:20:46.840 --> 0:20:49.920 name was short, it had a nice sound to it, 0:20:49.920 --> 0:20:53.080 it was easy to remember, and folks wouldn't make it 0:20:53.200 --> 0:20:55.679 so much fun of it, like you didn't hear people 0:20:55.760 --> 0:20:58.320 making as much fun of the name Hulu as they 0:20:58.400 --> 0:21:02.240 later would. For like Quibi Quibi was the source of 0:21:02.440 --> 0:21:05.119 endless jokes, Hulu, I don't remember a lot of people 0:21:05.160 --> 0:21:07.440 making fun of it. While the site would go into 0:21:07.520 --> 0:21:09.960 beta testing before the end of two thousand and seven, 0:21:10.240 --> 0:21:14.840 it would not officially launch as a service until October 0:21:14.960 --> 0:21:18.760 two thousand and eight. By that time, Netflix's streaming service 0:21:18.840 --> 0:21:22.239 had a year's head start, but Hulu had something that 0:21:22.280 --> 0:21:27.160 Netflix didn't have. Hulu, with its agreements with the various studios, 0:21:27.160 --> 0:21:30.080 which would change out fairly frequently in the year leading 0:21:30.160 --> 0:21:32.760 up to launch, would be able to host episodes of 0:21:32.800 --> 0:21:37.560 shows the day after they originally aired on TV. Netflix, 0:21:37.600 --> 0:21:41.159 by comparison, would only be able to add shows in seasons, 0:21:41.440 --> 0:21:43.840 So you would get an entire season of a show 0:21:43.880 --> 0:21:47.480 added to Netflix once the company had secured a licensing 0:21:47.560 --> 0:21:50.560 deal for that particular season, and then you could watch 0:21:50.600 --> 0:21:53.240 all the episodes in that season, but you wouldn't be 0:21:53.280 --> 0:21:55.359 able to see the latest stuff. Hulu was kind of 0:21:55.359 --> 0:21:57.879 the opposite. You could see the latest stuff, but you 0:21:57.920 --> 0:22:00.840 couldn't watch a full season early on. Hulu was free 0:22:00.880 --> 0:22:04.240 to use and it was also ads supported, but Kyler 0:22:04.280 --> 0:22:07.960 was also careful not to overload ads on episodes, which 0:22:08.000 --> 0:22:12.359 is something I wish other companies would practice. I'm not 0:22:12.880 --> 0:22:17.320 naming names, I'm not making any accusations about anyone specifically, 0:22:17.720 --> 0:22:21.760 but on a totally unrelated note, I am obligated to 0:22:21.800 --> 0:22:35.199 take another break to take our sponsors. We'll be right back. Okay, 0:22:35.320 --> 0:22:39.880 so we are back. And besides me being cheeky about ads, 0:22:40.320 --> 0:22:45.080 Kyler was very much aware of the effect ads have 0:22:45.440 --> 0:22:48.600 on viewership. He would later publish a blog post that 0:22:48.600 --> 0:22:52.479 would outline certain observations he had made while in the 0:22:52.640 --> 0:22:57.000 entertainment business, and one really big one was about ads. Specifically. 0:22:57.040 --> 0:23:01.120 He wrote in a memo that quote, traditional TV has 0:23:01.240 --> 0:23:04.399 too many ads. Users have demonstrated that they will go 0:23:04.480 --> 0:23:07.880 to great lengths to avoid the advertising load that traditional 0:23:07.920 --> 0:23:11.320 DV places upon them. Setting aside sports and other live 0:23:11.359 --> 0:23:15.800 events programming, consumers are increasingly moving to on demand viewing 0:23:16.160 --> 0:23:20.199 in part because of the lighter ad load end quote. 0:23:20.280 --> 0:23:23.359 To that end, Hulu typically limited ads to two minutes 0:23:23.359 --> 0:23:26.840 of advertising per half hour of content, which was far 0:23:26.920 --> 0:23:28.959 below what you would find if you were tuning in 0:23:29.000 --> 0:23:32.639 to live TV. For films, studios had the option to 0:23:32.680 --> 0:23:36.200 allow users in ad free experience during the film itself 0:23:36.359 --> 0:23:39.560 if in return, the users agreed to view ads up 0:23:39.600 --> 0:23:42.760 front before the film started. You've probably seen a message 0:23:42.760 --> 0:23:44.920 that was something like, thanks to our sponsors, you can 0:23:44.960 --> 0:23:48.160 watch the following presentation free of ads, or something like that. 0:23:48.600 --> 0:23:52.119 In that same memo in which Kyler pointed out the 0:23:52.200 --> 0:23:55.880 issue with ads, he also talked about how audiences were 0:23:56.080 --> 0:24:01.480 increasingly migrating to on demand viewing experiences. Traditional television requires 0:24:01.560 --> 0:24:05.359 viewers to watch on their schedule, not the viewers, So 0:24:06.160 --> 0:24:10.640 that's frustrating, right when you have to be available when 0:24:10.680 --> 0:24:14.520 the program airs. Technology started to allow for time shifting. 0:24:14.600 --> 0:24:17.280 I mean VCRs led the way, at least for those 0:24:17.320 --> 0:24:19.200 of us who are willing to learn how to set 0:24:19.240 --> 0:24:22.160 a VCR to record a specific channel at a specific time, 0:24:22.280 --> 0:24:26.240 which wasn't always user friendly or easy. Then we could 0:24:26.240 --> 0:24:29.000 watch the programming whenever we wanted to, not just when 0:24:29.040 --> 0:24:32.119